New York pied-à-terre tax: the new cost of a vacant home
New York created, in 2026, an annual surcharge on non-residents' second homes. It stacks on FIRPTA and the estate tax — and targets the foreign owner.
An apartment in Manhattan used a few weeks a year is, for many international families, more than leisure: it is a store of value, a foothold in New York, diversification. For years, the cost of keeping it sitting empty was the local property tax and little else.
That changed. In 2026, New York created an annual surcharge on high-value second homes whose owners do not live in the city — the so-called pied-à-terre tax. And it was designed, in its own sponsors’ words, to reach “out-of-city residents and global elites” who use New York real estate as a wealth-storage vehicle. The foreign buyer is, explicitly, the primary target.
This article explains the new tax, how it stacks on top of taxes that already existed, and why it reinforces a conclusion we have already drawn about US property: the real cost of ownership goes far beyond the purchase price.
What the pied-à-terre tax is
The term comes from the French for “foot on the ground” — the occasional-use city residence. The new tax is an annual surcharge on New York City residential properties that are not the owner’s primary residence.
The essential contours, under the 2026–2027 budget legislation, effective from 1 July 2026 (with a sunset clause in 2031 if not extended):
- Who it reaches. High-value residential properties — one- to three-family homes and condominiums/co-ops — that are not the owner’s primary residence, where the owner’s actual primary residence is outside the five boroughs.
- Value bands and annual rates. As announced: 0.8% for properties between US$5 million and US$15 million; 1.05% between US$15 million and US$25 million; and 1.3% above US$25 million, with thresholds that widen over the phase-in.
- Who is exempt. A property used as a primary residence by the owner or family, or leased to a tenant who uses it as their primary residence under a lease of at least one year. Short-term rentals and vacant properties are not exempt.
The policy message is clear: keeping an expensive property sitting empty in New York now costs, every year, a meaningful fraction of its value.
The point that changes the maths: it stacks
The most common mistake is looking at the pied-à-terre tax in isolation. What matters is how it adds to the stack of taxes the foreign owner already faced. For a US$10 million apartment:
| Tax | When | Nature |
|---|---|---|
| Transfer tax (city + state) | At purchase | One-off |
| Mansion tax | At purchase | One-off |
| Property tax | Every year | Recurring |
| Pied-à-terre tax | Every year | Recurring (new) |
| FIRPTA withholding | At sale | One-off |
| Estate tax | At death | One-off |
The pied-à-terre tax is the third recurring layer on ownership. And it sits alongside two events we have already covered: the 15% FIRPTA withholding on sale and the estate tax of up to 40% on US-situated property, both detailed in US property via an LLC. The question for the owner is no longer “can I absorb the surcharge once?” but “do I want to pay it every year, for the next decade, on a property I use a few weeks?”
A note on responsibility: New York’s pied-à-terre tax is recent, phases in over time, and carries a sunset clause; its thresholds, rates and exemptions may be adjusted by legislation and city administration. The rules here were verified against the official sources in July 2026. The classification of a specific property — value, use, rental, title structure — must be confirmed case by case, with advisers in the US.
What to do with a property already held
There is no formula, but there are paths worth analysing — each with trade-offs.
Check the classification and exemptions. Not every non-resident property falls into the surcharge. A long-term lease to a tenant using it as a primary residence may exempt it — but turns the “pied-à-terre” into an income investment, with the tax consequences of renting as a non-resident (30% gross withholding or an election to be taxed on the net).
Redo the ownership maths. Adding up property tax, the pied-à-terre tax and opportunity cost, a vacant property may no longer make sense — or it may still. It is a numbers question, not an attachment one.
Review the title structure. As always with US property, how you hold it (own name, LLC, foreign corporation) interacts with FIRPTA, estate tax and now the holding cost. And the holding enters the count for reporting foreign assets on your home side.
Frequently asked questions
I live abroad and have an apartment in New York I use on holidays. Do I pay the pied-à-terre tax?
If the property meets the value thresholds and is not your, your family’s, or a long-term tenant’s primary residence, as a rule yes — it is an annual surcharge.
Does it replace the mansion tax?
No. The mansion tax is one-off, paid at purchase. The pied-à-terre tax is recurring, every year. Both can apply.
Does renting the apartment avoid the tax?
It can, if it is a long-term lease to a tenant using it as a primary residence. Short-term rentals and vacant properties do not escape it — and rental income has its own taxation for non-residents.
Does it stack with FIRPTA and the estate tax?
Yes. They are distinct taxes: the pied-à-terre tax applies to ownership; FIRPTA, to the sale; the estate tax, to death. All can reach the same property.
How to verify for yourself
- Pied-à-terre tax — New York State’s 2026–2027 budget legislation and guidance from the city’s Department of Finance.
- FIRPTA and the estate tax for non-residents — the IRS (Section 1445 and estate tax for a “nonresident not a citizen”).
If any figure or rule differs from the official source when you read it, the official source prevails.
Where to start
The pied-à-terre tax is not, on its own, a knockout blow — it is one more layer. But it is exactly the stacking effect that redefines the cost of keeping a high-value property sitting empty in New York for someone living abroad.
The right question is not “how much is the new tax.” It is “what is the total cost of holding my US property — purchase, annual ownership, sale and succession — and does it still make sense, in the right structure.” The answer is a matter of the numbers, on both sides of the border.
That is what our work in wealth protection and tax planning is about: sizing the real cost of each asset before it surprises you.
One conversation is enough to know whether your New York property still pays off — and how to hold it.
Informational content. It does not constitute legal, tax, accounting or investment advice, nor an opinion on US law. The rules cited were verified against the official sources indicated in July 2026 and may change. Taxation of US property requires individual analysis, with advisers in the United States and in your country.